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tv   Mad Money  NBC  January 13, 2016 3:00am-4:00am EST

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that oil is collapsing? instead, the entire stock market was falling when oil dipped below $30. we only rallied in the late afternoon with the dow rising 118 points. s&p gaining and nasdaq, 1.03%. oil bounced back from its lows and closed down 3% instead of 5%. as investors held out the usual hope, the market is free to enjoy. with oil at $30, pretty much straight down from june of 2014. you would think we would be dancing in the streets. i can recall bull markets based on the cost of fuel. the combination of a reduction in the price of gasoline to under $2 in your heating bill. it is like giving every single family a $1500 tax cut.
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pay for it later. i know as a proprietor of a restaurant and an inn. a restaurant in brooklyn, this decline is a highly variable cost to my business. a major windfall for 2016. i'm thrilled. what a terrific bottom line win out of nowhere. can you paneling what must be the story in every company that must generate power to make things or businesses that manufacture objects out of plastic that are oil-based. energy is a principle cost for almost company i follow which makes this a fabulous windfall. how the heck is the crash in oil producing the opposite impact, bringing down the vast majority of stocks in awe sorts of industries, including those that involve heavy energy consumption? how can oil be so in control, so negative? in a typical market, we would be
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raise estimates for a whole host of companies that use energy. first, whenever something falls this precipitously, even something we as consumers want to decline, it sets off warning bells and buzzers for those who manage billions of dollars in capital. i have emphasized over and over again to you that this is a supply problem, not a demand issue. many money managers just don't see it that way. they look at all the other commodities that are falling like iron and aluminum and coal and copper and say they are going down because of lack of demand, particularly from china. why should this commodity fuel be any different. it is viewed as a sign that china is getting even weaker. incredibly weak, much weaker than we thought. that is going to reverberate
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i know it sounds counterintuitive to you and me. david faber and i were talking this morning on "squawk on the street" when we were doing our mad dash. no company we know of is jubilant about this price decline. no can be is saying, like i just said about my inn and my restaurant, a huge windfall on the bottom line. i'm thrilled. most companies won't acknowledge the positives, except for the airlines and the cruise ship companies, i don't care a good word from any executive how they are licking their chops over lower fuel costs. it is almost eery about how much it is down played. retailers and restaurants say they aren't seeing any pick up in spending or not one they are willing to admit to. the whole price of decline is
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positively. maybe people are hoarding the additional dollars and saving them. i haven't heard a restaurant say one word about how it is booming, because the consumer has more money. i haven't heard any retailer credit gasoline with higher sales. they are more than offsetting anything good that comes from the collapse of oil. they reported after the close that china is good. that restaurant chain goes up. how about us. the destruction in the american oil industry, it's front page news. 30 defaults already. one look at the credit market shows that we can expect one-third of the entire industry to go under. that's a frightening figure. it is possible that if oil stays down or goes lower, a huge part of that $300 billion in high yield bonds that this industry has issued will need restructuring. code 4, hey, look out below.
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in these oil stocks. it is gruesome how they go down and huge gobs of points for every $1 in this commodity. the capital construction is horrendous and extends to all the pipeline stocks that have been viewed as safe heavens for rich people. they were supposed to be simple toll rhodes. some pipeline companies did have exposure. most were charging a fee for all who used the pipes. the toll road analogy holds all too true. if you build a toll road, the number of projected users decline and they can't pay the bills and the toll road can fail. there is nothing magical. right now, the number of cars is declining rapidly and the number of roads is expanded by leaps and bounds. too many competitive pipes, not enough oil and gas to ship. that could be disastrous for the pipeline companies and their share holders. the visibility of these declines
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is the entire market. when we see very smart oil men like harold hand, talk about how crude will rebound or boone pickens said the same on our show last week, hey, any day now, any moment, it has to bounce, doesn't it? then, we get my consultant friend, rusty brazil from rbn energy. he is talking about in his book that oil can stay down for years and years. the difference between rusty and these oil men. they are talking about their book, their position that they own in oil. they want it to go heimer. particularly harold ham. he owns a lot of oil. rusty maybe talking his book but an actual book, namely "the domino effect." the best seller he has penned that described why oil may not
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a very long time. the big, quick recovery scenario, way optimistic. he, not the oil man, has been right. it is starting to down on many that he may stay right. let's put it together. we have a once in a lifetime decline and nobody is crowing about it. you have the appalling losses of the oil companies. if no one is spending more, no company saved a couple of cruise ships and airlines are doing better, you can see why we ignore the positive and focus on the negatives. the bottom line here is we need to respect the fact that something good for the economy, lower oil, can be a negative for the stock market, at least short-term, no matter how wrong it might turn out to be over the long term. or until oil stabilizes at any level, do not expect any relieve from the selloff or a trading balance. anything more than that would be
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the fragile nature of the entire market and the world's economies. roger in ohio. >> boo-yah, jim. how you doing? >> i'm glad to hear from you. what's going on? >> so i've been looking at the dividends of chevron and exxon, 4%, 5% yielder and bp is yielding 8.5. do you think bp is safe even though oil stays under for a couple of quarters? >> i think that no oil company dividend is safe right now and the companies that say it is are not. you have to believe that oil is going to come back and that company is growing and come back hard. i don't see that. >> let's go to mike in new york. >> jim, thanks for taking my call. very professional staff. >> thank you. >> jim, i have a quick question about the bank stocks.
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crisis. i was probably one of the only ones that was buying when everybody else was running. i got into some good shares and i'm doing pretty good with them. my question about citigroup. i also own jpmorgan. i look at dividends, i'm okay. i look at wells fargo. i look at that measly 5 cent dividends. do you see this thing making head winds down the road? >> i think the problem is, mike, on the street.com, real money, there is a story about how city may have more china exposure. that's what people are concerned about, international exposure for citi. i think it is overdone. i understand also the chart looks bad. these are things that i think mike corvo has well in hand. that stock is out of favor. i have to recognize and respect how much it is disliked by him to come on this quarter and tell us why the market is wrong
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because oil bounced. don't expect anything big until oil stabilizes. dow chemical has been put through the meat grinder. i'm going to talk to the ceo. olive garden offers unlimited breadsticks. could the stake in the company hurt the chance for limited profits? my wife says she didn't hear it enough. i have to say i have something wrong.
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stick with cramer. my son and i used to watch the red carpet shows on tv now, i'm walking them. life is unpredictable one thing i need to be predictable is to be flake free. because i have used head and shoulders for 20 years. used regularly, it removes up to 100% of flakes keeping you protected
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you ready ma? always life is unpredictable, so embrace it! head and shoulders. live flake free for life here is a puzzle. what are investors supposed to do with dow chemical and dupont? they have this great plan to merge and break up the company into three separate businesses,
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rumors about this deal. dow chemical shot up to a high last month. with this amazing merger slash breakup plan, the stock has been put through the meat grinder. at some point, i think the stock will become way too cheap and you will have to buy it. for now, it is not exactly liked. my charitable trust has been picking up some shares but it is not profitable to do so. let's check in with the ceo and chairman of dow chemical. find out who are about where this company is headed. mr. livers, welcome back. >> nice to be back. >> you have a state-of-the-art facility that is changing the game for how this country and companies are using natural gas. describe how important this is and why dow chemical is no longer hostage to the price of oil. >> the facility we are looking at today is called a pdh
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propane, which is the cheapest and makes a vital feed stock called propylene where a lot of products that we make and others make is based on. the opportunity to do that here in texas and the united states, we have the world's largest facility to do this. it is the first of its kind. a gen 1 facility. it is producing propylene, a third of dow's previous purchases of propylene that are oil-based which now move over to this facility and we will make it from propane. the other thing, i did, we inaugurated our new innovation center. 900 scientists under one roof. the building i am in right now. 900 scientists. the campus will swell to 2000. scientists in america for valued products that we need to create sustainable solutions whether they be in energy sufficiency,
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the dow strategy. that's what i have been doing today. >> andrew, this is amazing. typically, when oil goes down, dow has gone down. you are using fuel cheaper than oil so you can capture that. you are probably the lowest cost user in the world. here we have a stock that has gone to 45. if there was no deal with dupont, i would be pounding the table and saying, you can buy back stock, your earnings are going to explode. look at this innovation, a fountain of knowledge and technology. is the dupont/dow deal putting a lid on dow stock? >> i don't believe the dow/dupont deal is doing that, jim. look, you said it in your intro, the macros here are everywhere and nowhere. the only thing that's going to
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companies that perform. the agricultural market is going through a down slide. our friends at dupont are heavily exposed to that. they have revised their outlook. we are less exposed but we are also exposed, as you said, to the manufacturing sector and the views to china. there are two cyclical phenomena occurring that are affecting both of us. at the end of the day, what we will do and we are doing it daily, every day, marching to the close of this magnificent deal. this deal makes so much sense. for years, dow has been asked how are you going to grow in agriculture? what are you going to do with the agrisciences and dupont ag sciences will be the number one player in seats, trades and chemistry. we are doing it in a tax-efficient manner. how can that not be a good deal? >> that is a phenomenal de. we are receiving a dupont
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materials, transportation, automotive, hand in glove to dow. the dow materials company will be born and no longer that diffuse and that diluted across many markets. packaging, transportation, construction, personal care. so these two companies get born and a small little portfolio company that will have its own value driver. the synergies in doing this at $3 billion a year, the number we pet out there, what we will do these many months, we will be out there with investors and walk them through the deal and walk through the specifics and you will look back at your question and say, it wasn't a range-bound question. it was the market is on a very big down right now. we have been caught up in it. the outlooks are the outlooks. as we perform and explain, you will see the reaction. >> let's go back to your facility at freeport. i agree with you. the market is reacting in
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our natural gas is so plentiful. i have to ask you, are we the cheapest manufacturing site in the world right now if you are using natural gas? >> so the answer is going to be, yes, but there is a qualification. in a free market context, where hydrocarbons are priced according to markets, the answer to that is an unequivocal yes. the only parts of the world where it is cheaper is in controlled markets like in the middle east. but look what's happening in the middle east. the saudis and others are beginning to unregulate their hydrocarbon markets. they have to, they have to. you have seen the reaction to some of the news coming out of saudi arabia. not just there, from indonesia to china to the venezuelas and the brazils, people are moving away from regulated hydrocarbons and fuels to market-based. as that happens, i'm convinced
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unequivocally the cheapest place in the world for natural gas and natural gas stocks. >> are you working daily with the people with dupont so you can, for instance, would dupont be using your facility? is there a way to be able to quantify what it means for dupont people too? >> yes. the answer to that is yes. under the legal frame works that the deal hasn't closed. we are working very closely on the information that we can work on that's mostly in the synergy area. we are working hand in glove. ed breen and i are in daily contact. our teams are in contact. the topic in front of dupont right now is what ed talked about with david faber and you were on the line when we announced the deal. dupont announced cuts before our deal. that's what they are working through right now. that's very tough, specially in their headquarters. so we are going to have to give them a little time and space
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going through. we are working with them daily to get us to the point where the whole market can see the value of this deal despite what's going on in the macros. this deal creates new value, great new value. >> i think that is true. people are talking about and the negativity. there is a tremendous amount of negativity about the company that you are merging with, not with dow. >> dupont is a storied company. dupont has great science, great scientists, great people, great brands. their franchise is a great franchise. pioneer is a great subsidiary they have in iowa. we are working closely to put the two ag companies together, not just in size but in growth
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this too will pass. the negativity will pass. we at dow have been through it. you know that. the last five years, we have done enormous portfolio changes. yes, we appear and are stronger. we are performing but our friends at dupont, as we merge, that strength will be leveraged so we can both be winners in our new form and the three entities that will be created. >> congratulations on that new facility. very exciting. puts a lot of people to work. always good to talk to you, sir. thank you so much for being on "mad money." >> down to freeport, texas, jim. >> i would like to do that. >> chairman, president, and ceo of dow chemical. "mad money" is back after the break. we were below the 88th southern parallel. we had traveled
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the activists in starboard value is trimming its position for olive garden. does it matter that starboard was able to pass the entire board and management, cutting it from 9.1% to 8.1%. if you only bought it because you were following the moves of
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sell it. you don't know anything and you did no homework. what else are you going to do other than follow them out like you followed them in? if you did the work on darden, studied the company and recognized it is doing better than it was under the previous regime and a huge beneficiary of lower gasoline prices, they don't talk about it much, like i said at the top of the show. you know to keep the stock or buy some. you don't need to know what it is doing but accept the hedge fund is having a big win. the fact is that darden is a much-improved company with much better same-store sales. they are the most important metric to follow in the restaurant business. more important, i think it is necessary that you make decisions based on your own homework. case in point with starboard. the company took a big position in macy's not that long ago. they suggested the department store might try to monetize the real estate in creative ways i know that i heard jeff smith,
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talk about how macy's could find ways to bring out value, harold square in new york, chicago, san francisco. it was a compelling presentation. the problem, the stock was at $72 by the time smith finished his talk, up more than $2 during the speech and the company said, basically, talk to the hand or they said, we opened all discussions but they didn't want to do it. since then, macy's has been crushed. if you didn't know better, you would think it had a two for one sale. the fundamentals deteriorated rapidly, some because of the insanely warp weather before the holidays and because of the own admission and it has e-commerce issues. it needs to step up to meet the challenges of a very aggressive amazon. many can be price compared on amazon and ordered as part of amazon prime. if you bought macy's on the starboard presentation last summer, you were burned. it is true that starboard hasn't
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they reiterated to macy's that it should still try to monetize its considerable reestate port foal crow. without doing any homework, you would have been obliterated even though i think macy's stock has gotten too cheap. if you don't have the inclination to do your own research or you can't or simply don't have the time, give your money to an index fund. that's fine. it is because of situations like darden today and macy's earlier this week that i stress understanding what you actually own. let me give you the bottom line. let darden and macy's say the hedge funds, to understand what you own and why you own it. only then can you avoid big losses and have control of your capital in a responsible and rigorous way. let's go to adam in tennessee. >> hey, jim, we are starting to see some chipotle lawsuits coming out. how low do you this i it will
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will it make a comeback by 2016? >> first of all, i think the world of the company. i think it has changed the whole way that people view food in restaurants. what happened is a crisis. people have to put some time between when there is a crisis and when things get better. if you have no more instances of e. coli and you think all the costs put in for the new safety plan, i think is best in show, you should be able to start thinking about buying chipotle if the stock is under 400 six months from now. that's my formula. that's what it is looking like. you into ed to go against easier comparisons. >> michael in california, michael. >> boo-yah, jim, it is michael from the university of san diego. >> good to have you on the show. >> what are the prospects for growth in latin america? >> i have devoted a lot of time to thinking about what's speculative and how speculation could be dangerous. as soon as i hear latin america, the last thing i want to do is
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is absolutely to me beholden to a part of the world that i don't want to right now. why don't you get into costco and can go considerably higher. andrew in florida, andrew. >> cramer, thanks for taking the call as always. thanks for all the work you put in. big thanks to your staff as well. kiley, in particular, she is always nice. >> she is fabulous and from summit, new jersey. you can't beat that. my question is on the stock i took in 300 shares of yesterday. i wish i would have waited until today. i expected some of the sales to translate over. while i like it, because it is very cheap. only 7.5 times. i need your take on game stop. >> game stop is hated about i this market even though they put up some pretty terrific same-store sales. people are reading through and saying it is a digital game. don't get involved.
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take two. it has tremendous momentum and not that expensive in 2017. it is a buy, buy, buy. you need to understand what you own and what you do. don't just follow the activist investors. macy's and darden, you won't do anything about them, but do the homework and maybe you are a buyer. >> two speculative stocks would mark the bottom. it was a mistake to opine. i'm not afraid to admit it. i'll reveal the names and give an updated take on the prospects. so far, 2016 has been a very difficult year for certain bio stocks. could a company turn its luck around. it is speculative. your stock calls are just ahead
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it's the best performance year to date. we are gripped with intense commodity and inflation at the same time the fed is dead focused on fighting the scourge of almost nonexistent inflation. oil is going solo, the companies in the energy business are going to have to reenjize. how many? too many. back drop, negative.
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of breed are getting damaged when they report good news or excellent earnings. stocks that received takeover bids are concerned whether they should do the deals at all. would dow chemical been higher had it not tied up with dupont. short-term, as ceo, andrew liveris tells us, investors don't want to own the best of them. a short-term bottom. we are the most oversold we have been in many months. maybe oil can bounce. maybe china can do something right. speculating, buying stocks has been the single worst strategy of 2016. they have every right to speculate. some of our biggest wins here have come from speculating with low price stocks. consider that more than ten years ago, i bought the ceo for general, i brought hip on the show when the stock was a $5 stock.
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we talked about a revolutionary drug. they could work wonders against a nasty eye disease called macular degeneration. the standard of care was giving patients a weekly injection in the eye. lynn said he could cut it down to one injection a month, not one a week. i would in disbelief. i merely suggested that regeneron would be a terrific stock to speculate on. it turned out to be a good tip. i urged you to buy perspectives with a rich takeover bid from celgene. right now, i would tell you with the current set of circumstances, i would have been reluctant to recommend the stocks of either companies as they were positioned back then. they had been kicking around for ages. i remember buying some regeneron that talked about cutting edge treatment that could lead to a
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it didn't pan out. i would be totally gun-shy. same set of circumstances in 2005. i would fear the eye drop, turned out to be one of the great all-time blockbusters that could be a loser, like the spinal cord. regeneron would be way too much. i misjudged the environment. i championed fitbit from the moment it came public. when it got too close, i had the good fortune to say take profits. we compared fitbit to gopro and gopro plummeted and fitbit hung in. with the stock at 30, i interviewed james park and feeling real sure, i said this is going to be a fitbit christmas and garner incredible sales from corporations that might want to cut down their
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i was right on both. every major retailer sold a huge fitbits. they have been winning big corporate orders, health and wellness, keep the bills down. not only that, on january 5th, bob, one of the best analysts in wall street came out with a report that was more glowing than my review of fitbit. since then, the stock has fallin apart. tremendous shadow boxing at the consumer show about a myriad of fitbit competitors and apple is about to come out with a fitbit killer. neither seems to be challenging their prospects right now. it didn't matter. fitbit is a speculative stock. i was right about the holidays and the orders. it didn't prevent the stock from being hammered. this market, poor speculation. i should have recognized that. how about alcoa, same thing.
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issues involving the falling price of aluminum. i chose to overlook those and after interviewing ceo, klaus kleinfeld, i recommended alcoa. i believe the price of aluminum won't matter and the glitch will be history. i was wrong. the market was unwilling to overlook anything negative. it totally turned against what i thought was a decent speculation ahead of the mid-year breakup. it sent the stock down. now, i have little doubt that klaus kleinfeld's decision to split alcoa with a dominant position is the right move. i believe the stock will react very positively to the larger sum of the parts way of evaluating the company. it could be huge. my push on what is the speculative grade situation is wrong. it would be short-term. just like with fit-bit, i
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have. now, i still believe in both stories. maybe this piece will mark the maybe we will look back and laugh. i think fitbit stock simply does not reflect the opportunities open to this company as a health and wellness device and overstates the landscape. two, tremendous value. i was wrong with the environment. that's a huge factor in what i should be taking into account when i do "mad money." i am issuing a mea culpa for fitbit and alcoa. i remain confident in the long-term value of both the stocks and the companies behind them. degree gave women a motion-activated wristband to understand how much they move,... and created degree with motionsense. the world's first antiperspirant activated by movement, it has unique microcapsules that break with friction to release bursts of freshness all day.
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lightning round. >> are you ready? time for the lightning round. mary in illinois. >> how can they sell securities? >> ring the register. that's a completed story. how about alex in ohio? >> hey, boo-yah, cramer. i'm a new york university student wondering about hawaiian holding. >> no, no, we want to be in delta. thank you for mentioning cedar fair.
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it is gasoline coming down, a buy, buy, buy. >> let's go to rick in florida? >> thanks for taking my call. i am calling about canadian solar. >> the only one we are going to recommend is first solar, which i think can go up substantially here. i need to go to joe in new jersey. >> i love your show. thanks for all you do for our home gamers. our 52-week low and pays close to a 3% dividend. the stock is duncan brands group. >> i am the best of breed. when you can get starbucks under 60, i think you have to take advantage of that. howard schultz, talking positively about china. it went up to the charitable trust name.
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>> how are you doing, jim? >> i'm doing well. my stock is atwood oceanics inc. >> we are not going to go there. why should we reach down to the atwood? we have to be very careful. larry in illinois, larry? >> hey, jim, i'm calling about diamond reports international. >> i would like to like this stock because it is down so much. the hotel chains are all in major retreat. why? i think a lot of it has to do with air b&b. people are not willing to talk about it. they should be doing better than they are. >> gary in florida. >> hey, it is gary in palm beach, florida. i have been a fan for decades. >> thank you. >> fedex, buy, sell or hold? >> i like fedex. it is part of this whole conundrum of inactivity, down from 185 to 134, i am not going to back away. if i wanted 150 shores, i would
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points. this market is very crazy. leave some room. >> michael in alabama. >> thank you. based on the recent dip in the biophrma market and their current pipeline, would you rate celldex, buy, sell, or hold? >> i have it down a huge number of points. the stock just rallied a little bit. it is a very inextensive hold. i am going to say sell celldex. >> i want to know if i should buy more u.s. steel? >> i am concerned about the balance sheet. it does concern me that the chinese are playing unfair and the loser is u.s. steel.
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so far, 2016 has been a good year.
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since the year began. even if you are falling from $15 where it peaked in august, $18 down since november. novavax is the kind of speculative stock that people want to take profits on. they recently started phase 3 trial for the vaccine for a highly contagious respiratory virus. the stock was down big and finished higher. let's dig deeper. he is set to present at the jpmorgan tomorrow. welcome back to "mad money." >> thanks for having me back. >> since we saw you last, there are a couple of good things that have gone on. phase two trial for this rsv vaccine in older adults and vaccine to protect infants via maternal immunization. the company is doing great
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can you give us an early look at what you are going to say tomorrow about the two different trials? >> yeah, jim. i think we have capped out a terrific year. we started the year initiating five clinical trials and we unblinded the trials and all the data were great. two of them resulted in great results and it is reviewed in great detail by the fda. it relieves a lot of risk of the product going forward, that the fda agrees with us on the safety and efficacy of these vaccines. these are the first two phase 3 rsd vaccines ever made. we are in for an exciting year. >> phase 3 pivotal vaccine for older adults. it could be expected as early as 2016.
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be more optimistic about the day. >> i think so. we are on a very predictable path now for pivotal phase three data. the pieces that make it look interesting and really lower the risk on a product is that we got, as i say, through the fda with their blessings. we know what the end points are. they are to duplicate what we did in the phase 2 trial. we know we have got the rsv season ongoing right now. we have vaccinated 11,850 people in five weeks last month. so now we execute and pull out data and the end of the third quarter and file this data with the fda. >> 11,000 to 17,000 adults die of the complications.
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this is pretty urgent. does the fda want this out for people at high risk? >> they do. when we first went to them, we had data from the phase 3 trial, we had a very narrow timeline on when we could start the phase 3. the rsv season starts in december and goes through march or april. we had to have a meeting with the fda before the season started. so they readjusted their schedule, had a meeting with us and it allowed us to recruit these 11,800 people to start the trial. i think the fda has been very good at recognizing that we have the only rsv vaccine that's ever shown efficacy in any population. >> it is funny, stan. i'm listening. i was thinking to myself, only in this really difficult market where that kind of good news would actually be greeted with a selloff. i guess you have to keep your
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to the stock. >> i have the benefit of the curse of being in biotech for 30 years. i have seen these reactions. we have nothing but great data in the last six months. we have a good team, the product, the data. we just have to keep moving forward. >> well, i think that's exactly the way people have to look at it who are investing in home too. that's president and ceo of novavax, stan erck. great to see you, sir. >> thank you, bye-bye. >> this selloff will pass and the companies that are doing well will prosper. laundry can wreak havoc on our clothes, ruining them forever. sweaters stretch into muumuus. and pilled cardigans become pets. but it's not you, it's the laundry.
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...with downy fabric conditioner... it not only softens and freshens, it helps protect clothes from the damage of the wash. so your favorite clothes stay your favorite clothes. downy fabric conditioner. wash in the wow. i'm here at my house, on thanksgiving day and i have a massive heart attack right in my driveway. the doctor put me on a bayer aspirin regimen. be sure to talk to your doctor before you begin an aspirin regimen. go talk to your doctor.
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listen up. we are the most oversold we have been in months. that often signals a short-term bounce.
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reconfiguring if we don't get good, actual substantive news and lighten up on day two. not yet. i would like to say there is always a bull market somewhere. i promise to try to find it just for you. i'm jim cramer and i'll see you tomorrow. it's wednesday, january 13th, and coming up on "early today" president obama cautions the nation, hits republicans hard and optimistic head nothinging into his final year. >> that's what makes me so hopeful about our future. i believe in change because i believe in you, the american people and that's why i stand here as confident as i've ever
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